Shareholders Equity?

[brandoncrossman]

What is shareholders equity and what is it used for? Does a company use the shareholders equity? And also i was wondering what is the net income used for? I understand that the net income=revenue-expenses but what does a company do with the net income? Could someone help clear this up for me? Could you explain with basic terms as i am a beginning investor. Thanks.

[Pearlpam]

hello traders,
Shareholder Equity is the net worth of a company. It represents the stockholders' claim to a business's assets after all creditors and debts have been paid. Shareholder equity is also referred to as Owner's or Stockholders' Equity. It can be calculated by taking the total assets and subtracting the total liabilities.
Shareholder equity usually comes from two places. The first is cash paid in by investors when the company sold stock; the second is retained earnings, which are the accumulated profits a business has held on to and not paid out to its shareholders as dividends. Because these are the two ways a company generally creates shareholders' equity, the balance sheet is organized to show each parts' cont